Towards a world war of interest rates aimed at capturing global savings

Towards a world war of interest rates aimed at capturing global savings

Excerpt GEAB N°31

As a matter of fact, the recent step taken by the Fed proves that, though they do not admit it, they are in fact beginning to realize that they are facing a problem of general insolvency in the US (and in the related countries, such as UK (1)), affecting the federal State, federated states, companies, banks and households. For this reason, they have started (2) buying the T-Bonds issued by the US federal government. Of course this is pure money creation and a clear signal that Washington is now compelled to pay its abysmal deficits by issuing thousands of billions of new Dollars. And of course it is only transferring the question of solvency onto the Fed whose balance sheet – already loaded with toxic assets bought from the banks in the past months – is thus downgraded by the purchasing of massive amounts of US T-Bonds otherwise lacking buyers (whatever the main financial media may say). There is indeed no reason why the Fed would have to buy US T-Bonds if other buyers were available. In fact the general context prompts to suspect that the Fed has been buying US T-Bonds for some months already, through its « Primary Dealers ». Two indicators are in favor of this idea: on the one hand, the Fed is refusing to reveal who got (and therefore to what end) the dozens of billions of US Dollars recently given away (3) ; on the other hand, Germany itself, seated on a sound economy, on exemplary budget management methods and big surpluses, is beginning to find it difficult to sell its own Treasury bonds (the Bunds) (4).